FxWirePro: GBP/AUD corrections on verge of bearish DMA crossover, consolidation phase on bullish MACD crossover – Snap rallies to construct tunnel spreads

Chart & candlestick patterns: Bearish engulfing pattern on daily plotting, Bearish DMA crossover on 4H plotting and bullish MACD crossover on monthly plotting.

Major support is seen at 1.7668 and major resistance at 1.7733 (i.e. 7SMA).

Although GBPAUD rallies have bounced after testing supports at 1.7668 levels, remained well below 7SMAs. For now, any abrupt rallies could see the maximum upside potential upto this stiff resistance levels.

On the flip side, any break below above-stated support is likely to drag more slumps upon bearish SMA crossover (please note that 7SMA crosses below 21SMA which is bearish crossover).

While both leading & lagging indicators have been converging to the prevailing selling interests on this timeframe.

As you could see on the monthly plotting, the recent attempts of upswings have been attempting to break-out and sustain above the major stiff resistance levels of 1.7701 levels, any failure swings below these levels likely to evidence slumps again; otherwise, the extension of rallies upto next strong resistance of 1.7802 is the most likely event. Hence, it is deemed as the major trend has been traveling in the consolidation phase.

While both leading (RSI and stochastic) indicators have been converging upwards but slightly indecisive in overbought territory, Thus, no traces of bearish momentum at all.

The stochastic oscillator is halting at or near overbought region from last 2-3 months (refer monthly plotting).

MACD is also in sync with this bullish indication, this lagging indicator evidences the bullish crossover and entering into the bullish trajectory that indicates consolidation phase in the major trend to prolong further amid minor hiccups.

Well, overall the consolidation phase in getting prolonged but with the minor corrections.

Since, we kept stiff resistance at 1.7733 (i.e. 7SMA which means at around 50 pips approximately from the spot levels), buying tunnel spreads that are the binary version of the debit put spread is advocated at spot reference 1.7601.

This strategy is likely to fetch leveraged yields than spot FX and certain yields keeping upper strikes at 1.7733 and lower strikes at 1.7683 levels.

Currency Strength Index: FxWirePro's hourly GBP spot index is inching towards -25 levels (which is bearish) ahead of UK’s construction PMI print which is likely to be announced shortly. While hourly AUD spot index was at shy above 89 (bullish) while articulating (at 09:27 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit: 

http://www.fxwirepro.com/invest